Brand equity is a concept similar to the accounting term goodwill' in the sense that both affect the value of the company and both are linked to reputation or image of the company involved. In fact in the assessment of the fair value of the goodwill of a company the goodwill figure is often equated to the amount of brand equity present.Infamous brands like the Nike swoosh add immense value to the Nike company because its customers associate it with quality and value for money. When someone is looking for a sneaker, Nike is sure to be one of the brands they immediately come up with, such is the extent of brand recognition the company has developed over the years. The true worth of brand equity is in the perceived value the image of the brand or the brand name conjures up in the minds of the consumers.

There are three main ways to assess brand equity. They are as follows;

Financial. If the consumer is willing to purchase a generic product, for instance a T-shirt, and the consumer prefers to pay a premium to buy the T-shirt with the Gap tag rather than purchase another unmarked T-shirt, this premium is the brand equity. This figure will give a good indication of the success of the company's marketing efforts, and is thus a great performance indicator.
Brand extensions. In the same example of the Gap t-shirt, the Gap Company may have started off manufacturing only blue jeans, and built a name based on quality and durability of its product. When they decided to start making underwear and T-shirts this expanded product line automatically shared in the success of the Gap brand name.
Consumer based. This implies that product sampling is one of the best methods to build brand equity, as it requires the consumer to have experience with the product. Actual product testing and consumer experience with a product or service builds brand loyalty which is one of the major benefits of a strong marketing campaign.

Healthy brand equity has many benefits including increased market share and thus increased cash flows. Also due to the increased market share cash flows become more predictable as the level of brand loyalty feeds directly into steady sales figures. Brand equity, like goodwill can be sold or leased in the sense that it will add a premium on the value of the company in the event of a sale. Thus decifering the value of brand equity as well as working to build a strong brand should be one of the main objectives of any marketing campaign.